A 24% increase to the health insurance costs was a topic of discussion at the January 13 Board of Finance meeting after a teachers union member talked about a proposed 24% increase in teachers insurance premiums during public participation.

Trent Harrison, a resident and also the president of the teacher’s union, the Newtown Federation of Teachers, was concerned that the large increase would lead to teachers choosing to leave the district since it would more than counteract any raise they receive for the year. He mentioned shortages in the medical line items and expressed his disappointment in the Board of Finance and Board of Education for allowing that to happen.

Later in the meeting, Finance Director Glenys Salas reported that the town’s unassigned fund balance was $12,959,578, or 9.4% of the overall budget. It is below the 12% maximum set by policy but still above the 8% minimum.

“The reason for the drop is that advances in the water and sewer fund were deemed non-spendable by our auditing team in consideration of the long-term structural nature of the debt,” said Salas. “This is a change from prior reports.”

She went on to explain that the drop in fund balance means there is no funding left to help replenish the funds in the medical self-insurance fund balance.

Salas said that the increases across the town for medical insurance are due to a number of catastrophic claims, and town employees insurance co-pays are increasing 18% for both town and school employees; the 24% increase is on the employer side for the schools, and was caused by the fact that “contributions to the [Health Savings Accounts] were not properly accounted for in prior years.” This is the 50% employer contribution that the schools make to the employees’ HSA funds. This has led to an $850,000 deficit in that line item since it was not budgeted for Fiscal Year 2025.

“That is the challenge the Board of Education is facing this year, with the 18% increase as then an additional $850,000,” said Salas.

Finance Board member Barney Molloy questioned how the oversight happened but Salas responded she “did not have any visibility” into how the deficit occurred. She said the school administration had acknowledged that the $850,000 would have to be included for next year but Salas said she would “keep an eye on that budget.”

Salas said the Medical Self-Insurance fund “didn’t have any material deficiencies” in its accounting, but that the town’s advisors would tell the town that it was not advisable for that fund to run a deficit.

The town’s stop loss was budgeted at $2 million for next year but will be increasing to $3.6 million due to a number of large claims. Part of that number is last year the medical insurance line item did not include $350,000 in administrative fees, the rest is an increase due to the claims.

Salas noted that large increases have been happening over the last few years; as three to four years ago, the town’s stop loss claims were $1 million per year, and now it’s closer to $4.5 million per year.

“We’ve had a fundamental change in what stop loss looks like,” said Salas.

She also said that claims below stop loss used to be approximately $11 million per year but now are closer to $16 million per year.

“We’ve had a fundamental shift in what claims look like,” said Salas. “And that goes back to an industry-wide reaction to COVID.”

Salas said there was little the town could do to get control of costs short-term. She said the town will be running a $3.6 million deficit “at least through fiscal year ‘25.”

Going to market for an insurance provider instead of being self-insured would likely create a situation where the town was paying exactly what it’s paying now, “plus 10%.” The State of Connecticut has a partnership pool, but it is unknown if that would save Newtown any money.”

Editor Jim Taylor can be reached at jim@thebee.com.